Initial U.S. jobless claims decreased 58,000 to 346,000 for the week ended July 5, the U.S. Labor Department announced Thursday. Claims for the previous week were unrevised at 404,000.

Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 399,000.

Also, the four-week moving average decreased 10,000 to 390,500. Economists view the four-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays, or other idiosyncratic events.

Economist Peter Dawson said investors / traders should not react too favorably to this week's jobless claims picture. "It is a surprisingly good number, but keep in mind it's just one week," Dawson said. "Also, continuing claims are still rising and have been trending higher for more than six months. That stat is more indicative of the soft job conditions the U.S. is currently experiencing."
The largest increases in initial claims for the week ending June 28 were in: Kentucky, +4,192, Massachusetts, +3,467, Indiana, +3,313, Michigan, +3,260, and New York, +2,894. The largest decreases were in: Pennsylvania, -2,510, Iowa, -2,130, Wisconsin, -2,129, Georgia, -1,882, and Maryland, -1,520.

Meanwhile, the number of continuing claims increased 91,000 to 3.202 million from a revised 3.111 million for the week ended June 28, the latest period for which figures were available. Further, the 3.202 million total was the highest continuing claims level since February 2004.

Economic Analysis: A surprisingly mild weekly job claims report, but as economist Dawson noted, continuing claims are still rising - - indicative of the difficultly U.S. adults are having trying to secure new employment. And while the four-week moving average dropped to 390,500, that's still an elevated rate. Essentially, the U.S. economy currently is one where massive lay-offs are not occurring, but hiring is scant.